Waiver Under Section 12(5) A&C Not Inferred From Conduct Of Party, Even If It Participates In Arbitration: Delhi High Court Sets Aside Arbitral Award

The Delhi High Court single bench of Justice Prateek Jalan dismissed the contention that a party can waive its right to object to the arbitrator's appointment through its conduct. It underscored that any waiver under Section 12(5) of the Arbitration and Conciliation Act must be explicit and in writing. It noted that there is no room for implying a waiver of rights under Section 12(5) through conduct or any other means. Even if a party participates in arbitral proceedings without explicitly objecting to the arbitrator's appointment, it cannot be construed as a waiver of its rights under Section 12(5) of the Arbitration Act. Brief Facts: The Petitioner approached the Delhi High Court (“High Court”) under Section 34 of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”) challenging an Arbitral Award dated 06.01.2020, which resolved disputes arising from an Agreement dated 27.10.2008. The Arbitrator, appointed unilaterally by the Respondent, adjudicated the claims and counterclaims of the parties, ultimately rejecting them. The primary contention raised in support of the petition was the unilateral appointment of the arbitrator by the respondent, which violated Section 12 of the Arbitration Act, rendering the award void. The Respondent, presented two objections to the petition. Firstly, it argued that the petition was time-barred due to delay. Secondly, it contended that the Petitioner engaged in the arbitration proceedings without objection. Observations by the High Court: Coming to the first contention raised by the Respondent, the High Cout noted that the Award in question was issued on 06.01.2020, and although the Petitioner initially filed a petition before the District Court under Section 34 of the Arbitration Act on 12.03.2021, it withdrew it on 16.11.2021 due to jurisdictional issues, subsequently filing a petition before the High Court on 03.01.2022, which was defective, leading to the filing of the present petition on 12.05.2022. Regarding the objection concerning the lapse of the 90-day period provided under Section 34(3) of the Act, the High Court referred the Supreme Court's order in In Re: Cognizance for Extension of Limitation, which extended the limitation period due to the COVID-19 pandemic. Notably, it clarified that the period from 15.03.2020 to 28.02.2022 would be excluded from the computation of limitation, thereby covering the entire delay in the present case. The High Court then addressed the second ground of objection, which pertained to the eligibility of the arbitrator and the waiver of objections to such eligibility. The High Court emphasized the necessity of an express agreement in writing to waive objections to the ineligibility of an arbitrator. Furthermore, it rejected the notion of inferring waiver through conduct, reinforcing the requirement of an explicit agreement in writing. Therefore, the High Court held that the impugned Award was legally void. Case Title: Alka Sachdeva vs Bhasin Infotech And Infrastructure Pvt. Ltd.Citation: 2024 LiveLaw (Del) 335 Case Number: O.M.P. (COMM) 239/2022. Advocate for the Petitioner: Mr. R.L. Syngal & Mr. Manoj Pandey, Advocates. Advocate for the Respondent: Mr. Ravinder Singh & Ms. Raveesha Gupta, Advocates.Click Here To Read/Download Order

Waiver Under Section 12(5) A&C Not Inferred From Conduct Of Party, Even If It Participates In Arbitration: Delhi High Court Sets Aside Arbitral Award

Rajesh Kumar

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